President Trump’s budget team ordered a temporary pause on certain types of “federal financial assistance” spending besides Social Security, Medicare and other select programs pending a review.
The sweeping halt, which encompasses programs that President Trump has targeted via executive order including foreign aid, was blocked by a DC federal judge just before it was set to go into effect Tuesday at 5 p.m. — the first salvo of a legal showdown over the extent of a president’s powers to spend or not spend money appropriated by Congress.
The number of programs affected and the exact amount of funding at stake is unclear because the memo from the Office of Management and Budget (OMB) was rife with carveouts subjecting the freeze to what is “permissible under applicable law” and allowing for exemptions on a “case-by-case basis.”
The White House is pausing federal grants and loans starting Tuesday as President Trump’s administration begins an across-the-board ideological review of its spending. AFP via Getty Images“This is not a blanket pause on federal assistance,” White House press secretary Karoline Leavitt told reporters Tuesday afternoon in her first briefing.
“Individual assistance, that includes … Social Security benefits, Medicare benefits, food stamps, welfare benefits, assistance that is going directly to individuals will not be impacted by this pause.”
However, Democratic lawmakers from Connecticut, Florida, Illinois and Hawaii claimed that their state’s online Medicaid portals were down after the memo was issued.
“The White House is aware of the Medicaid website portal outage. We have confirmed no payments have been affected — they are still being processed and sent. We expect the portal will be back online shortly,” Leavitt later explained on X.
Meanwhile, the attorneys general of six Democrat-led states — California, Illinois, Massachusetts, New Jersey, New York and Rhode Island — announced they were suing to challenge the hold.
“There is no question this policy is reckless, dangerous, illegal, and unconstitutional,” said New York state AG Letitia James. “This policy will disrupt the lives of millions of Americans in New York and nationwide.”
The $1,200 federal CARES Act stimulus check that was issued during the coronavirus pandemic as seen in Hawthorne, NJ, on May 19, 2020. Christopher Sadowski“Congress controls the purse strings,” argued Andrea Campbell of Massachusetts, “and the executive branch cannot decide to halt funding just because they don’t like how Congress chooses to spend it.”
In response to a separate case brought by a group of nonprofits, US District Judge Loren AliKhan issued a temporary restraining order through Feb. 3 to allow litigation to play out.
At the White House, Leavitt argued that the new administration is obligated to “be good stewards of taxpayer dollars.”
“What does this pause mean? It means no more funding for illegal DEI programs,” she said. “It means no more funding for the Green New Scam that has cost American taxpayers tens of billions of dollars. It means no more funding for transgenderism and wokeness across our federal bureaucracy and agencies, no more funding for Green New Deal social engineering policies.”
The press secretary went on to claim that since the memo from OMB acting director Matthew Vaeth went out Monday evening, the newly minted Department of Government Efficiency (DOGE) and OMB “have actually found that there was $37 million that was about to go out the door to the World Health Organization, which is an organization, as you all know, that President Trump … no longer wants the United States to be a part of. So that wouldn’t be in line with the president’s agenda.
“DOGE and OMB also found that there was about to be 50 million taxpayer dollars that went out the door to fund condoms in Gaza,” Leavitt added. “That is a preposterous waste of taxpayer money. So that’s what this pause is focused on — being good stewards of tax dollars.”
Vaeth’s memo ordered agency heads to “identify and review all Federal financial assistance programs and supporting activities consistent with the President’s policies and requirements.”
“To the extent permissible under applicable law, federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that the executive orders may implicate.”
Agencies had a deadline of Feb. 10 to apprise OMB about specific “programs, projects or activities subject to this pause.”
“OMB may grant exceptions allowing Federal agencies to issue new awards or take other actions on a case-by-case basis,” the memo caveated.
“Career and political appointees in the Executive Branch have a duty to align Federal spending and action with the will of the American people as expressed through Presidential priorities,” Vaeth explained.
“The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.”
OMB director-designate Russ Vought, who has yet to be confirmed by the Senate, has been a proponent of impoundment, in which the president could simply opt against spending on certain types of programs appropriated by Congress.
Back in 1974, Congress passed the Impoundment Control Act, which imposes limits on a president’s ability to refrain from spending on items that the legislative branch has appropriated.
“The president ran on the notion that the Impoundment Control Act is unconstitutional,” Vought told senators during his confirmation hearing earlier this month. “I agree with that.”
Vaeth said all spending must comply with Trump’s executive orders, which are intended to undo progressive steps on transgender rights, environmental justice and diversity, equity and inclusion efforts. REUTERS“Donald Trump’s Administration is jeopardizing billions upon billions of community grants and financial support that help millions of people across the country,” Senate Minority Leader Chuck Schumer (D-NY) fumed in a statement.
“It will mean missed payrolls and rent payments and everything in between: chaos for everything from universities to nonprofit charities.”
Top Democrats on the House and Senate Appropriations Committees inked a letter to Vaeth late Monday demanding that he “reverse course to ensure requirements enacted into law are faithfully met.”
“We write with extreme alarm about the Administration’s efforts to undermine Congress’s power of the purse, threaten our national security, and deny resources for states, localities, American families, and businesses,” Senate Appropriations Committee ranking member Sen. Patty Murray (D-Wash.) and her House counterpart Rosa DeLauro (D-Conn.) wrote in the letter.
“The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country. We write today to urge you in the strongest possible terms to uphold the law and the Constitution and ensure all federal resources are delivered in accordance with the law.”
Currently, the US national debt is hovering around $36 trillion, while the federal budget deficit topped $1.8 trillion in fiscal year 2024.
